Various Tax News

20 million qualify for ACA penalty exemption
According to a Brookings Institution paper on the Affordable Care Act, an estimated 20 million taxpayers who had no health insurance in 2014 will qualify for an exemption from the penalty for failing to have insurance. It’s not known how many of those who qualify for the exemption will actually claim it. To check the available penalty exemptions, visit the IRS web site at www.irs.gov

New myRA program now available
A new simplified Roth IRA is the newest retirement plan. The account is called a myRA (short for “my retirement account”). It’s funded by having your employer make direct paycheck deposits to your account. The contributions to your myRA are invested in government-guaranteed Treasury securities. A myRA isn’t connected to your employer; it belongs entirely to you and can be moved to any new employer that offers direct deposit capability. The annual contribution limits that apply to regular Roth IRAs apply to myRAs. To find out more about myRAs, contact our office.

IRS tax audits cut by budget issues
The IRS reports that its enforcement budget has been cut by $254 million, a 5% reduction from the previous year. As a result, the Agency expects to cut the number of individual and business audits it conducts. In 2014 the IRS audited 0.86 percent of individual taxpayers and 26% of large corporations. Though audit statistics show a decline in examinations, the IRS contacts many more taxpayers with questions about their returns. Once statistics include these taxpayer contacts, the 2014 return examination rate is closer to 4% or one in every 25 returns filed.

Your 401(k) and a job change
If you change jobs this year, don’t forget about your 401(k) in your old employer’s retirement plan. You may be tempted to cash out the balance in the account, but remember that distributions from such accounts are generally taxable. Instead, ask your plan administrator to make a direct rollover to your IRA or another qualified plan. If you’re under age 59½, this decision also avoids the additional 10% penalty on early distributions. An added benefit: Your retirement money can continue to grow tax-deferred.